Building flexibility into your estate plan is crucial to make sure that your wishes are followed, and your assets administered correctly, as life events happen and financial circumstances change in the future. While the amount of flexibility required can vary for different families’ situations, there are generally some steps that can be taken, and some important documents that can be implemented, to provide an estate plan that is capable of properly addressing the unexpected.
You will want, at a minimum, a Last Will and Testament, to provide for the disposition of your assets upon your death. Many also find it necessary or desirable to put into effect one or more trusts to control, in more detail, and for longer periods of time, how those assets will eventually pass. As important as the instructions contained within those documents are the people selected to carry them out. Thoughtful selection of executors, trustees, and guardians for minor children, including successors, is of particular importance, especially when those roles may be held for lengthy periods of time. The discretion of the trustee can provide additional flexibility in the future over and above the terms of the documents themselves.
It is also important not to overlook lifetime planning documents. With medical advances, people are living longer than ever. Disability and diminished capacity are conditions that seem to touch a member of every family in one way or another. Living Wills, Health Care Powers of Attorney, and Financial Powers of Attorney provide necessary guidance and appoint others to make decisions, and attend to a person’s affairs, when they are incapable of doing so themselves. Failing to have these documents in place may require that a court appoint a guardian, perhaps someone other than whom the person may have intended, when the time and cost of doing so could have been easily avoided.
While having a completed estate plan is paramount, it is also necessary, from time to time, to review and update your plan. I recommend doing so every few years, or anytime that significant events occur. These can include (and are not limited to):
· The birth of a child
· A death in the family
· Marriage or divorce
· A change in your employment or business
· A change in financial circumstances
· Changes in applicable tax laws
Last but not least, do not forget to address how assets are titled and proper beneficiary designations. Some assets may not pass under a person’s will or trust (e.g. joint assets, retirement plans, life insurance), but will instead be distributed in accordance with such designations made by you. It is important that those directions are in place so that your wishes are respected. An estate plan may not function as intended without addressing these items, and adhering to the above can help make sure your estate plan can handle any of life's occurrences.